Pricing Strategy for Martha's Macadamia Milk Product
Martha's Macadamia Milk product pricing strategy involves analyzing raw nut costs, competition pricing, assumptions for US market pricing, and per carton costs for different variants like Sweetened, Unsweetened, and Chocolate. The strategy includes factors like additional costs, production costs, marketing, and profit margins to determine optimal pricing for different product variations.
Download Presentation
Please find below an Image/Link to download the presentation.
The content on the website is provided AS IS for your information and personal use only. It may not be sold, licensed, or shared on other websites without obtaining consent from the author. Download presentation by click this link. If you encounter any issues during the download, it is possible that the publisher has removed the file from their server.
E N D
Presentation Transcript
Pricing Strategy for Marthas Macadamia Milk Product Tricia Maxwell, Cesar Vera, Aalok Davey
Raw Nut Cost Raw Nut Cost Style 4- Broken nut cost $6.85lb 1lb of nuts given a 1 cup nut generates 3 cups of milk ration = 5.5 cartons of milk Cost per carton for nuts $1.25 After production: Assumed 5% of nut byproduct can be sold for Brittle or Feed Resale value of $0.35 per lb
Competition Competition Trader Joes2 Almond and Macadamia Nut Chocolate 32 oz: $2.99 Milkadamia1 Unsweetened 32oz: $4.99 Sweetened 32oz: $4.99 Vanilla 32oz: $5.99 Suncoast Gold3 Macadamia Nut Unsweetened 1 LT AUD 3.99 Sweetened 1 LT: AUD 3.99 1Prices based off available online retailers Chocolate 1 LT: AUD 3.99 2Prices based off 2018 release of Almond and Macadamia nut product specific to Trader Joes 3Product is not available for sale in US but would be priced at around $3 if converted
Assumptions Price for US market would need to be around comparable US competitors (i.e. Milkadamia) Price for Unsweetened and Sweetened would be the same Price for Chocolate could be 25% higher because it is only product in market
Per Carton +10 cents +20 cents Sweetened 32 oz Package Nut Cost $1.25 $1.35 $1.45 Additional Costs Sugar/Sweetener $0.10 $0.20 $0.30 Chocolate $0.00 $0.00 $0.00 Water $0.25 $0.35 $0.45 Production cost $0.10 $0.20 $0.30 Marketing $0.50 $0.60 $0.70 Container $0.50 $0.60 $0.70 Shipping Costs $0.10 $0.20 $0.30 Payroll/ Labor Costs $0.10 $0.20 $0.30 Estimated Cost per Carton $2.70 $4.99 $3.30 $4.99 $3.90 $4.99 Sale Price [Assumed] Profit $2.29 $1.69 $1.09 Profit Margin 46.0% 34.0% 21.9%
Per Carton +10 cents +20 cents Nut Cost $1.25 $1.35 $1.45 Additional Costs Sugar/Sweetener $0.00 $0.10 $0.20 Chocolate $0.00 $0.10 $0.20 Water $0.25 $0.35 $0.45 Production cost $0.10 $0.20 $0.30 Marketing $0.50 $0.60 $0.70 Container $0.50 $0.60 $0.70 Shipping Costs $0.10 $0.20 $0.30 Payroll/ Labor Costs $0.10 $0.20 $0.30 Unsweetened 32 oz Package Estimated Cost per Carton $2.60 $4.99 $3.30 $4.99 $4.00 $4.99 Sale Price [Assumed] Profit $2.39 $1.69 $0.99 Profit Margin 48.0% 34.0% 19.9%
Per Carton +10 cents +20 cents Chocolate 32 oz Package Nut Cost $1.25 $1.35 $1.45 Additional Costs Sugar/Sweetener $0.00 $0.10 $0.20 Chocolate $0.00 $0.10 $0.20 Water $0.25 $0.35 $0.45 Production cost $0.10 $0.20 $0.30 Marketing $0.50 $0.60 $0.70 Container $0.50 $0.60 $0.70 Shipping Costs $0.10 $0.20 $0.30 Payroll/ Labor Costs $0.10 $0.20 $0.30 Estimated Cost per Carton $2.60 $3.20 $3.80 Sale Price [Assumed] $6.24 $6.24 $6.24 Profit $3.64 $3.04 $2.44 Profit Margin 58.4% 48.8% 39.2%
Suggestion We would recommend taking a conservative approach to the cost basis (Assume nut cost and additional costs to be +10 cents than current levels) Even with increased costs, the company can generate healthy profit margins of >30% for Sweetened and Unsweetened milk, and >45% for the Chocolate flavor However, we would need to incorporate sourcing costs, production costs, overhead, payroll, sales & marketing and other expenses to get a more accurate pricing model
